Using the financial statements for the Snider Corporation, calculate the 13 basi
ID: 2421187 • Letter: U
Question
Using the financial statements for the Snider Corporation, calculate the 13 basic ratios found in the chapter.
SNIDER CORPORATION
Balance Sheet
December 31, 2013
Assets
Current assets:
Cash $ 51,800
Marketable securities 24,200
Accounts receivable (net) 174,000
Inventory 227,000
Total current assets $ 477,000
Investments 63,500
Plant and equipment. $ 646,000
Less: Accumulated depreciation 246,000
Net plant and equipment 400,000
Total assets $ 940,500
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 91,100
Notes payable 73,400
Accrued taxes 18,400
Total current liabilities $ 182,900
Long-term liabilities:
Bonds payable 156,700
Total liabilities $ 339,600
Stockholders' equity
Preferred stock, $50 par value $ 100,000
Common stock, $1 par value 80,000
Capital paid in excess of par 190,000
Retained earnings 230,900
Total stockholders' equity $ 600,900
Total liabilities and stockholders' equity $ 940,500
SNIDER CORPORATION
Income Statement
For the Year Ending December 31, 2013
Sales (on credit) $ 2,034,000
Cost of goods sold 1,308,000
Gross profit $ 726,000
Selling and administrative expenses 488,000 *
Operating profit (EBIT) $ 238,000
Interest expense 34,900
Earnings before taxes (EBT) $ 203,100
Taxes 89,300
Earnings after taxes (EAT) $ 113,800
*Includes $36,600 in lease payments.
Using the above financial statements for the Snider Corporation, calculate the following ratios.
a.
Profitability ratios. (Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places.)
Profitability Ratios
Profit margin %
Return on assets (investment) %
Return on equity %
b.
Assets utilization ratios. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
Assets Utilization Ratios
Receivable turnover times
Average collection period days
Inventory turnover times
Fixed asset turnover times
Total asset turnover times
c.
Liquidity ratios. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
Liquidity Ratios
Current ratio times
Quick ratio times
d.
Debt utilization ratios. (Do not round intermediate calculations. Input your debt to total assets answer as a percent rounded to 2 decimal places. Round your other answers to 2 decimal places.)
Debt Utilization Ratios
Debt to total assets %
Times interest earned times
Fixed charge coverage times
Explanation / Answer
Sr. No. Particulars Formula Details 1 Profit margin ratio EAT/Sales * 100 113800/2034000 * 100 = 5.59% 2 Return on assets EAT/Total Assets * 100 113800/940500 * 100 = 12.10% 3 Return on equity EAT/Shareholder's Equity * 100 113800/600900 * 100 =18.94% 4 receivable turnover ratio Closing receivables/Credit Sales 174000/2034000 = 0.08 times 5 Average collection period Receivable turnver ratio * 365 0.08 * 365 = 31 Days 6 Inventory turnover time Cost of goods sold/Average or closing inventory 1308000/227000 = 5.76 7 Fixed asset turnover Fixed assets/Sales 400000/2034000 = 0.19 8 Total assets turnover Total Assets/ Sales 940500/2034000 = 0.46 9 Current ratio Current assets/Current liabilities 477000/182900 = 2.61 10 Quick ratio Current assets-Stock)/Current liabilities (477000-227000)/182900 = 1.37 11 Debt to assets ratio Total Outsiders liabilities/Total Assets 339600/940500 = 0.36 12 Times interest earned EBIT/Interest 238000/34900 = 6.82 13 Fixed assets charge coverage (EBIT+Fixed charges before tax)/ (Fixed asset before tax + Interest) (238000+36600)/ (36600+34900) = 3.84
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